Ethical rules of conduct in the settlement of mass torts: A proposal to revise rule 1.8(G)

New York University Law Review

Volumn 83, Issue 2, 2008, Pages 501-531

  Dirks, Katherine ^a  

^a NEW YORK UNIVERSITY   (United States)

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EID: 46149124567     PISSN: 00287881     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (155)

1. 521 U.S. 591 (1997).
2. 527 U.S. 815 (1999).
3. Amchem and Ortiz each involved a global settlement of asbestos claims using the class action device, but the Supreme Court denied the class certification sought under Rule 23 of the Federal Rules of Civil Procedure. See infra notes 23-39 and accompanying text.
4. See Deborah R. Hensler, As Time Goes By: Asbestos Litigation After Amchem and Ortiz, 80 TEX. L. REV. 1899, 1920 (2002) ("One of the anomalies of asbestos litigation has long been its concentration among a small number of law firms.");
5. Deborah R. Hensler & Mark A. Peterson, Understanding Mass Personal Injury Litigation: A Socio-legal Analysis, 59 BROOK. L. REV. 961, 966 (1993) (reporting in 1993 that "[m]ost of the hundreds of thousands of claimants are represented by fewer than fifty plaintiffs' law firms that specialize in this litigation, and their law suits are concentrated in a dozen courts");
6. DEBORAH HENSLER ET AL., RAND INST. FOR CIVIL JUSTICE, ASBESTOS LITIGATION IN THE U.S.: A NEW LOOK AT AN OLD ISSUE 24 (2001), available at http://www.rand.org/pubs/documented_briefings/DB362.0/DB362. 0.pdf (claiming that ten law firms filed fifty-three percent of claims submitted to Manville Trust, which was established by Johns-Manville Corporation to resolve asbestos claims).
7. MODEL RULES OF PROF'L CONDUCT R. 1.8(g) (2003).
8. PAUL J. LESTI, STRUCTURED SETTLEMENTS app. Y.1, at 980 n.8 (2d ed. Supp. 2007).
9. MODEL RULES OF PROF'L CONDUCT R. 1.8(g) (2003).
10. See MODEL RULES OF PROF'L CONDUCT R. 1.8 cmt. 13 (2003) (identifying Rule 1.8(g) as corollary to Rule 1.2(a), which protects client autonomy, and to Rule 1.7, which addresses conflicts of interest).
11. 11 U.S.C. § 524(g) (2000).
12. See PAUL D. RHEINGOLD, LITIGATING MASS TORT CASES § 1:1 (2006) ("There is no established agreement on what constitutes the scope of the field of law and practice called 'mass torts.' Nor is there any need for general agreement since the topic is malleable and . . . the definition properly can change.").
13. See Brent M. Rosenthal et al., Toxic Torts and Mass Torts, 59 SMU L. REV. 1579, 1579 (2006) (defining "mass torts" as "litigation involving many claims of injury allegedly caused by the same product or tortious conduct"). Mass torts are distinguished by "the commonality of issues and actors and the interdependence of the monetary values of claims."
14. Nancy J. Moore, The Case Against Changing the Aggregate Settlement Rule in Mass Tort Lawsuits, 41 S. TEX. L. REV. 149, 156-57 (1999). "Mass accidents" are mass torts in which the injuries are caused by catastrophic events. See id. at 149-50, 150 n.3 (noting early mass torts were initially referred to as "mass accidents" since they were "largely based on train and plane crashes"). "Toxic torts" involve toxic substances that often produce latent disease in exposed individuals. See Rosenthal et al., supra, at 1579 ("[T]oxic-tort cases frequently involve latent injuries . . . ."). There is overlap among these three groups, but the conceptual focus of this Note is on mass torts.
15. Hensler & Peterson, supra note 4, at 965. These features, of course, present a much different picture than the archetypal case addressed by much of tort doctrine - individual, isolated events resulting in one adversarial confrontation.
16. Id.
17. Unified mass tort litigation also provides to plantiffs the "advantages . . . of economies of scale, increased leverage in settlement negotiations, and access to a small number of qualified attorneys." Moore, supra note 11, at 156-57.
18. E.g., Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999); Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997).
19. E.g., In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Prods. Liab. Litig., No. 99-20593, 2000 WL 1222042, at *1 (E.D. Pa. Aug. 28, 2000) (involving health effects of two related prescription diet drugs, fenfluramine and dexfenfluramine).
20. E.g., In re Silicone Gel Breast Implant Prods. Liab. Litig., No. CV94-P-11558-S, 1994 WL 578353, at *1 (N.D. Ala. Sept. 1, 1994).
21. For a brief description of the cases noted above at notes 15-17, see Richard A. Nagareda, Autonomy, Peace, and Put Options in the Mass Tort Class Action, 115 HARV. L. REV. 747, 751 (2002).
22. See Jeffrey M. Davidson, Theories of Asbestos Litigation Costs: Why Two Decades of Procedural Reform Have Failed To Reduce Claimants' Expenses, 7 NEV. L.J. 73, 81 (2006) ("[T]he decision to litigate rather than settle is a primary driver of the overall costs of the system. That is, for purposes of analysis, the costs of settlement can be regarded as negligible.");
23. Howard M. Erichson, Beyond the Class Action: Lawyer Loyalty and Client Autonomy in Non-class Collective Representation, 2003 U. CHI. LEGAL F. 519, 545-46 ("Mastery of a mass tort requires an enormous amount of time and mental energy, not to mention out-of-pocket expenses and firm resources.").
24. See John C. Coffee, Jr., Conflicts, Consent, and Allocation After Amchem Products - Or, Why Attorneys Still Need Consent To Give Away Their Clients' Money, 84 VA. L. REV. 1541, 1555 (1998) (showing class action data indicating that for most individual claims, litigation costs will far exceed average expected awards).
25. See Charles Silver & Lynn A. Baker, Mass Lawsuits and the Aggregate Settlement Rule, 32 WAKE FOREST L. REV. 733, 744 & n.40 (1997) (referring to use of "bellwether" trials as way for group of plaintiffs to maximize cost containment).
26. See generally Hensler, supra note 4 (discussing motivation behind class actions in asbestos context).
27. 521 U.S. 591 (1997).
28. HENSLER ET AL., supra note 4, at 4-5.
29. Id. at 10.
30. Mesothelioma, a deadly cancer that is the "signature disease" of asbestos exposure, has a very long latency period, sometimes taking forty years to develop. Id. at 19.
31. Amchem, 521 U.S. at 620.
32. Id.
33. Id. at 625.
34. Rule 23(a)(4) requires that "the representative parties will fairly and adequately protect the interests of the class." FED. R. CIV. P. 23(a)(4).
35. Rule 23(b)(3) requires that common questions must "predominate over any questions affecting only individual members" and that class resolution must be "superior to other available methods for the fair and efficient adjudication of the controversy." FED. R. CIV. P. 23(b)(3).
36. Amchem, 521 U.S. at 625-27; Hensler, supra note 4, at 1905-06.
37. Amchem, 521 U.S. at 628-29.
38. 527 U.S. 815 (1999).
39. Id. at 856-59.
40. Id. at 867-68 (Breyer, J., dissenting) (suggesting that without class-action settlement, "most potential plaintiffs may not have a realistic alternative" because of high litigation costs, long delays, and limitations upon total amount of resources available for payment).
41. See id. at 848 (majority opinion) (criticizing district court for failing to consider importance of structural protections of Rule 23 highlighted in Amchem).
42. FED. R. CIV. P. 23(e)(1)(C).
43. Ortiz, 527 U.S. at 863-64.
44. Francis E. McGovern, Settlement of Mass Torts in a Federal System, 36 WAKE FOREST L. REV. 871, 880 (2001).
45. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 628-29 (1997) (suggesting that "nationwide administrative claims processing regime" could provide fair and efficient compensation system). Congress has declined the repeated invitation by the federal courts to create a legislative scheme that would regulate how to resolve present and future asbestos claims. The Senate, in recent congressional sessions, has introduced versions of a proposed Fairness in Asbestos Injury Resolution Act, but they have never been enacted into law. See, e.g., S. 3274, 109th Cong. (2006) (proposing system to resolve asbestos claims with Asbestos Insurers Commission); S. 2290, 108th Cong. (2004) (proposing similar scheme).
46. See 7A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1751 (3d ed. 2005) (surveying history and purpose of class actions); 7AA id. § 1786 ("Without the notice requirement it would be constitutionally impermissible to give the judgment binding effect against the absent class members.").
47. See United States v. Cannons Eng'g Corp., 899 F.2d 79, 84 (1st Cir. 1990) ("[I]t is the policy of the law to encourage settlements."); Schneider v. Dumbarton Developers, Inc., 767 F.2d 1007, 1015 (D.C. Cir. 1985) ("[S]ettlement agreements are in high judicial favor.").
48. MODEL RULES OF PROF'L CONDUCT R. 1.8(g) (2003).
49. LESTI, supra note 6, at app. Y.1, at 980 n.8.
50. See, e.g., TEX. DISCIPLINARY RULES OF PROF'L CONDUCT R. 1.08(f) (2005).
51. See, e.g., Burrow v. Arce, 997 S.W.2d 229, 237 (Tex. 1999) (citing RESTATEMENT (SECOND) OF AGENCY § 469 (1958), according to which "agent is entitled to no compensation for conduct which is disobedient or which is a breach of his duty of loyalty," and RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 49 (Proposed Final Draft No. 1, 1996), applying same rule to lawyers).
52. Erichson, supra note 19, at 551-52, 571-72.
53. The Oklahoma Supreme Court rejected one attorney's assertion that he had to consult only with his "true client." State ex rel. Okla. Bar Ass'n v. Watson, 897 P.2d 246, 253 (Okla. 1994) (rejecting attorney's claim that because client Philip Walker - his "true client" - unofficially represented estates of attorney's other clients, attorney's duties ran only to Walker); accord In re Hoffman, 883 So.2d 425, 429, 432 (La. 2004) (finding unpersuasive attorney's defense that duty ran primarily to client who retained law firm, paid firm's fees, and authorized disbursement of settlement funds).
54. MODEL RULES OF PROF'L CONDUCT R. 1.8 cmt. 13 (2003).
55. E.g., Quintero v. Jim Walter Homes, Inc., 709 S.W.2d 225, 229 (Tex. App. 1985); RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 128 cmt. d(i) (2000).
56. See, e.g., In re Guardianship of Lauderdale, 549 P.2d 42, 46 (Wash. Ct. App. 1976) (holding that "the order approving the aggregate settlement, which no one contests, should be affirmed").
57. See, e.g., Acheson v. White, 487 A.2d 197, 200-01 (Conn. 1985) (affirming trial court's conclusion that petitioner had consented to terms of stipulated judgment regarding her interests in particular property). According to the Acheson court, the validity of the petitioner's consent "did not necessarily depend upon her specific knowledge of what interests in that property might be retained by other defendants not similarly situated." Id. at 200; see also In re Anonymous Member of the S.C. Bar, 377 S.E.2d 567, 568 (S.C. 1989) (declining to impose disciplinary action, despite attorney's admission that he failed to disclose each client's settlement amount).
58. See Hayes v. Eagle-Picher Indus., 513 F.2d 892, 894-95 (10th Cir. 1975) (holding that, in non-class action, clients cannot validly consent to be bound by majority acceptance of settlement terms); see also Knisley v. City of Jacksonville, 497 N.E.2d 883, 888 (Ill. App. Ct. 1986) (stating in dictum that, in joinder action, "fundamental fairness is violated when a settlement is allowed to bind parties who object" even though those parties previously agreed to be bound by majority rule).
59. See, e.g., Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442, 444 (Tex. 1983) ("[A] party has the right to revoke his consent at any time before the rendition of judgment.").
60. See Howard M. Erichson, A Typology of Aggregate Settlements, 80 NOTRE DAME L. REV. 1769, 1809-10 (2005) (explaining that argument for waiver is weak when there is little risk of extortionate holdouts); Moore, supra note 11, at 165 & n.98 (explaining that unanimity requirement encourages counsel to "develop the attorney-client relationship by regularly providing plaintiffs with as much information as possible about the progress of the lawsuit and affording them opportunities to consult regularly with members of the lawyer's staff").
61. Erichson, supra note 19, at 571-75.
62. Id. at 572.
63. Silver & Baker, supra note 21, at 771 (arguing that agency law leaves coprincipals "free to use" "less-than-unanimity rules when deciding whether to authorize an agent").
64. E.g., Burrow v. Arce, 997 S.W.2d 229, 237 (Tex. 1999) (citing RESTATEMENT (SECOND) OF AGENCY § 469 (1958)).
65. See, e.g., In re Hoffman, 883 So.2d 425, 432, 435 (La. 2004) (suspending attorney for three months for violation of Rule 1.8(g)).
66. 709 S.W.2d 225, 232 (Tex. App. 1985).
67. See id. at 229 (finding that attorney did not inform Quinteros "of the nature and settlement amounts of all the claims involved in the aggregate settlement").
68. Id. at 232.
69. ABA Comm. on Ethics and Prof'l Responsibility, Lawyer Proposing to Make or Accept an Aggregate Settlement or Aggregated Agreement, Formal Op. 06-438 (2006), reprinted in ABA/BNA LAWYER'S MANUAL ON PROF'L CONDUCT (2006) (expanding disclosure requirements under Rule 1.8(g)).
70. Id.
71. AM. LAW INST., PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION § 3.17 (Preliminary Draft No. 4, 2006) (on file with the New York University Law Review).
72. See, e.g., Quintero, 708 S.W.2d at 227-28 (involving plaintiffs' attorney who failed to inform clients of favorable jury verdict and then accepted settlement amount from defendant that was much lower than jury award).
73. In re Hoffman, 883 So.2d 425 (La. 2004), for example, involved a defendant who, unsatisfied with his share of his uncle's estate, retained an attorney to contest the uncle's will on behalf of his siblings and himself. Each of the siblings had received the same or similar amounts in the original will, but the defendant, who was the only family member actively engaged in the contestation, claimed over seventy-five percent of the settlement amount for himself. Id. at 427-29.
74. For commentary on the Supreme Court's "day-in-court" ideal of client representation, see Samuel Issacharoff & John Fabian Witt, The Inevitability of Aggregate Settlement: An Institutional Account of American Tort Law, 57 VAND. L. REV. 1571, 1576-77 (2004).
75. See infra Part II.C.
76. See, e.g., Erichson, supra note 19, at 519 ("[T]he profession's failure to recognize the collective nature of much litigation has left clients unprotected, and has engendered an ethical murkiness that leaves lawyers unsure whether they owe their loyalty to the individual or to the collective."); see also Nagareda, supra note 18, at 775-78 (comparing aggregate settlements, which prioritize client autonomy, to class actions, which achieve "peace at the expense of autonomy"). Howard Erichson, for example, has argued that in mass tort settlements, Rule 1.8(g) reinforces attorney loyalty and client autonomy. Erichson, supra note 19, at 553-54. The fact that individual claimants in a class action lack an opportunity to opt out of the class in reaction to a settlement offer has been criticized as needlessly destroying attorney loyalty and client autonomy. See, e.g., Mark C. Weber, A Content-Based Approach to Class Action Settlement: Improving Amchem Products, Inc. v. Windsor, 59 OHIO ST. L.J. 1155, 1158 (1998) (proposing that class actions "should not be settled unless the court gives all class members the option to reject the settlement and exclude themselves from the class at the time of the offer").
77. See, e.g., Steve Baughman Jensen, Like Lemonade, Ethics Comes Best When It's Old-Fashioned: A Response to Professor Moore, 41 S. TEX. L. REV. 215, 219 (1999) ("To provide a meaningful redress to those who have suffered injuries as a result of corporate misconduct, lawyers must do more than hand them a settlement check.").
78. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 616 (1997) (quoting Georgine v. Amchem Prods., Inc., 83 F.3d 610, 633 (3d Cir. 1996)).
79. See Davidson, supra note 19, at 107 ("The large number of cases means that plaintiffs do not and cannot exert real control over the course of their litigation.").
80. See id. (claiming that plaintiffs' counsel "own the litigation; they are the storekeepers").
81. See id. ("[T]he defendant is likely to exploit the disjuncture of client and attorney to get a better deal . . . .").
82. Issacharoff & Witt, supra note 70, at 1577 (contrasting Supreme Court's "day-in-court" ideal expressed in Amchem and Ortiz with reality that "aggregating devices . . . have long characterized tort practice in the area of mature torts").
83. Carrie Menkel-Meadow, a legal ethicist, has argued that conventional conflict-of-interest procedures are based on an idealized version of individual attorney-client relations. Carrie Menkel-Meadow, Ethics and the Settlement of Mass Torts: When the Rules Meet the Road, 80 CORNELL L. REV. 1159, 1172 (1995) ("Our legal system, and ethical rules, must confront the tensions between our ideals of individual justice and the reality of a need for 'aggregate' justice.").
84. See supra Part I.B (discussing various interpretations of what Rule 1.8(g) requires).
85. Compare ABA Comm. on Ethics and Prof'l Responsibility, supra note 65 (requiring disclosure of every other client's settlement receipts and how costs were apportioned), and Silver & Baker, supra note 21, at 734 (finding that Rule 1.8(g) requires "disclosure of all settlement terms to all clients, including . . . what other plaintiffs are to receive"), with Nagareda, supra note 18, at 768 n.79 (admitting that requiring disclosure of information on all other client awards "is not entirely obvious from [Rule 1.8(g)'s] text" (citing Silver & Baker, supra note 21, at 734)).
86. For instance, a special master for the court can direct the gathering of information on the claims, which is then disclosed to claimants. See, e.g., Pretrial Order No. 22, In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Prods. Liab. Litig., MDL No. 1203 (E.D. Pa. Mar. 23, 1998), available at http://www.fenphen1203.com/files/9235298.pdf (ordering plaintiffs to supply to defendants information within forty-five days of discovery initiation date); Pretrial Order No. 6, In re Orthopedic Bone Screw Prods. Liab. Litig., MDL No. 1014, 1995 WL 925678, at *1 (E.D. Pa. Feb. 1,1995) (ordering plaintiffs to provide documents for defendants on rolling schedule); Francis E. McGovern, Resolving Mature Mass Tort Litigation, 69 B.U. L. REV. 659, 669-70, 682-84 (1989) (surveying data-collection process for claims in asbestos and Dalkon Shield personal injury suits). In other cases, a compensation grid can organize claims by type rather than identifying them individually by client. LES WEISBROD ET AL., AM. TRIAL LAWYERS' ASS'N (ATLA), 5 ATLA's LITIGATING TORT CASES § 60:34 (2007) (noting that one method of complying with Rule 1.8(g) has parties agree to settlement values for plaintiff groups organized by demographic factors and legal issues).
87. Plaintiffs can waive due process rights to notice, trial, and hearing. Silver & Baker, supra note 21, at 769 (citing M/S Breman v. Zapata Off-Shore Co., 407 U.S. 1, 11 (1972); D.H. Overmyer Co. v. Frick Co., 405 U.S. 174, 185 (1972); Boykin v. Alabama, 395 U.S. 238, 243 n.5 (1969); Nat'l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 316 (1964)).
88. See supra notes 60-64 and accompanying text.
89. Cf. Charles J. Goetz & Robert E. Scott, Principles of Relational Contracts, 67 VA. L. REV. 1089, 1089-98 (1981) (discussing "efficient breach" theory of contract law, in which optimal contract performance occurs "under certainty").
90. See Erichson, supra note 19, at 522-23 (arguing that class action is only device whereby all parties similarly situated are bound by settlement agreed to by representative).
91. Some scholars analogize aggregate settlements to class actions. See, e.g., id. at 526-28 (exploring "plausible applications" of class action concepts for guidance in non-class mass litigation); see also John C. Coffee, The Regulation of Entrepreneurial Litigation: Balancing Fairness and Efficiency in the Large Class Action, 54 U. CHI. L. REV. 877, 904-05 (1987) (discussing interplaintiff competition by means of strategic opt-out decisions in class action context). This analogy, however, fails to account for the procedural structures created by Rule 1.8(g).
92. Of course, defendants will not achieve complete finality if the injuries from the alleged tort have not yet emerged. Aggregate settlements typically resolve only current claims, rather than future claims. Nagareda, supra note 18, at 752 ("Aggregate settlements afford little long-term peace to defendants . . . for they cannot resolve future claims.").
93. The desire for finality is what brings defendants to the negotiating table in the first place, and it can yield greater benefits for plaintiffs. Silver & Baker, supra note 21, at 760 ("[D]efendants who settle these lawsuits want finality and are willing to pay for it.").
94. See infra notes 100-04 and accompanying text (discussing incentives for strategic decisions made by individual stakeholders with strong and weak claims).
95. Moore, supra note 11, at 168 & n.110. In class actions in a variety of areas of law - antitrust, employment discrimination, and securities - judges often approve settlements that average damages rather than allocating them based on the strength of individual claims. Coffee, supra note 87, at 918 & n.104.
96. See Coffee, supra note 87, at 915 & n.93, 916 (referring to empirical work demonstrating that litigants earn more in individual litigation than in class actions and suggesting one "possibility is that bargaining . . . tends to disfavor the plaintiff with disproportionately high stakes in the action").
97. Silver & Baker, supra note 21, at 760-61.
98. Interview with Gabrielle Wolohojian, Partner, Wilmer, Cutler, Pickering, Hale & Dorr, in Boston, Mass. (July 25, 2007).
99. Coffee, supra note 87, at 918-19 (citing cases in which parties made "nuisance value" payments to subclasses with weak claims on grounds that "an early settlement benefits all"); see also Moore, supra note 11, at 168-69 ("[T]hose who benefit most from damage averaging are the victims whose claims are the smallest or the most questionable.").
100. Moore, supra note 11, at 168; see also Francis E. McGovern, The Tragedy of the Asbestos Commons, 88 VA. L. REV. 1721, 1743 (2002) (identifying quiet settlement of most "dangerous" cases as major strategy of many defendants).
101. Hensler & Peterson, supra note 4, at 1042-43 (noting that plaintiffs' counsel can spread costs of litigation and maximize fees by identifying more claims); see also Coffee, supra note 87, at 904 (addressing incentives faced by plaintiffs whose claims are "independently marketable").
102. For a discussion of the dynamics of achieving a near universal settlement, see Silver & Baker, supra note 21, at 765.
103. Interview with Gabrielle Wolohojian, supra note 94.
104. See Silver & Baker, supra note 21, at 767 (arguing that Rule 1.8(g)'s nonwaivable unanimous consent requirement "enables a single plaintiff" "with little at stake in a lawsuit . . . [to] make a credible threat to veto a desirable group deal unless paid a disproportionately large amount"). Rule 1.8(g) has been interpreted to require unanimous approval of negotiated settlements. See supra note 54 and accompanying text.
105. John Coffee discusses how this would play out in the class action context. If class actions permitted strong claimants to exit the settlement after the terms had been negotiated, this would turn the existing pattern "on its head, and the problem becomes not that the high stakes plaintiffs will be exploited, but that they could arguably acquire too much leverage." Coffee, supra note 87, at 925.
106. See supra note 92 and accompanying text.
107. The vulnerability of such claimants in class action suits, caused by their powerlessness to opt out after certification, is what spurs Coffee to suggest that class actions should permit claimants to opt out not only at the moment of class certification but also after the final settlement negotiation. Coffee, supra note 87, at 925.
108. See Silver & Baker, supra note 21, at 767 (theorizing that small claimants have ability to extort "disproportionately large" amounts due to unanimous consent requirement).
109. Nancy Moore argues this point, claiming that strong claimants can turn to "boutique" law firms that specialize in pressing forward with only the very strong claims from a mass tort. Moore, supra note 11, at 168.
110. For one set of criticisms of Silver and Baker's predictions regarding class actions, see Weber, supra note 72, at 1196-97, which argues that small claimants' threats are not credible since they have no way of getting compensation outside of the class.
111. See Silver & Baker, supra note 21, at 765 (explaining that desire for near-universal settlements is "why mass settlements usually contain walk-away provisions" for defendants).
112. 11 U.S.C. § 524(g) (2000).
113. Francis McGovern has proposed that § 524(g) be expanded to other mass tort settlements. Francis McGovern, A Model State Mass Tort Settlement Statute, 80 TUL. L. REV. 1809, 1810, 1818-19 (2006). McGovern's contributions are very valuable, but his proposal does not directly address the ethical constraints of Rule 1.8(g) in its current formulation.
114. See, e.g., Lester Brickman, Ethical Issues in Asbestos Litigation, 33 HOFSTRA L. REV. 833 (2005) (analyzing several asbestos-related ethical issues).
115. HENSLER ET AL., supra note 4, at 10. Over fifty corporations have filed for bankruptcy as a result of asbestos-related liabilities. AM. ACAD. OF ACTUARIES, OVERVIEW OF ASBESTOS ISSUES AND TRENDS 17 (2001), available at http://www.actuary.org/pdf/casualty/mono_dec01asbestos.pdf.
116. Francis E. McGovern, Asbestos Litigation II: Section 524(g) Without Bankruptcy, 31 PEPP. L. REV. 233, 241 (2003); Kenneth Pascuale & Arlene G. Krieger, Combustion Engineering and the Interpretation of Section 524(g), in NORTON ANNUAL SURVEY OF BANKRUPTCY LAW 149, 149, 153-55 (William L. Norton, Jr. ed., 2007).
117. 11 U.S.C. §§ 524(g)(1)(A)-(B), (4)(A)(ii) (2000).
118. Id. § 524(g)(2)(B)(i).
119. For background information on the contents of a plan of reorganization, see 11 U.S.C. § 1123(a) (2000).
120. See § 524(g)(2)(B)(ii) (setting forth preceding criteria in precise terms).
121. Ortiz v. Fibreboard Corp., 527 U.S. 815, 824-25 (1999).
122. McGovern, supra note 112, at 246.
123. See id. ("Most companies are reluctant to file for bankruptcy except as a last resort. They wait until their assets have been diminished so greatly that bankruptcy is the only alternative.").
124. See id. ("A prepackaged bankruptcy occurs . . . when a company negotiates a plan of reorganization, sends out a disclosure statement, and conducts a vote all prior to actually filing for bankruptcy."). Debtor corporations and creditors pursue prepackaged bankruptcies to reduce costs for all parties involved. See Samuel Issacharoff, "Shocked": Mass Torts and Aggregate Asbestos Litigation After Amchem and Ortiz, 80 TEX. L. REV. 1925, 1939 (2002) ("These prepackaged bankruptcies dramatically lower the transaction costs associated with conventional bankruptcies . . . ."). For further discussion of prepackaged bankruptcies, see McGovern, supra note 112, at 245-52.
125. § 524(g)(2)(B)(ii)(IV)(aa).
126. McGovern, supra note 112, at 237.
127. § 524(g)(2)(B)(ii)(IV)(bb).
128. Walter v. Celotex Corp. (In re Hillsborough Holdings Corp.), 197 B.R. 372, 379 (Bankr. M.D. Fla. 1996).
129. McGovern, supra note 112, at 242; see also Issacharoff, supra note 120, at 1939 (noting that § 524(g) bankruptcies "have the salutary effect of putting the injured claimants front and center in the workout process").
130. See Erichson, supra note 56, at 1775-76 ("As mass tort litigation matures, the certainty of liability, combined with the uncertain extent of that liability, imposes pressure on defendants to resolve the litigation with finality.").
131. See supra text accompanying notes 23-39 for a discussion of Amchem and Ortiz.
132. See Erichson, supra note 56, at 1772 (contending that "class certification is denied in most personal injury mass tort cases" because such mass torts have "too many individual issues to justify class treatment").
133. Brickman, supra note 110, at 867-68.
134. Id. at 868.
135. See RHEINGOLD, supra note 10, § 1.1 (offering "expansive listing" of mass tort categories, many of which - such as aviation and railroad disasters - result in immediate effects); Hensler & Peterson, supra note 4, at 969-1013 (listing major mass tort litigations between 1960 and 1992, which include mass accident cases, such as hotel fires, and food poisoning cases, such as salmonella outbreaks from contaminated dairy products).
136. See McGovern, supra note 112, at 260 (arguing that applying principles of § 524(g) more broadly "has the potential to create a statutory end game for asbestos litigation").
137. See supra notes 113-16 and accompanying text.
138. See supra notes 10-14 and accompanying text.
139. Cf. 11 U.S.C. § 524(g)(2)(B)(ii)(III) (2000) (requiring determination that "pursuit of such demands outside the procedures prescribed by such plan is likely to threaten the plan's purpose").
140. See supra text accompanying notes 32-33.
141. The current Rule provides that "[t]he lawyer's disclosure shall include the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement." MODEL RULES OF PROF'L CONDUCT R. 1.8(g) (2003).
142. For example, the silicone breast implant class settlement involved a grid with two axes: disease and age. Parties could appeal the classification of a claim to a claims administrator and then to a district court. JAY TIDMARSH, MASS TORT SETTLEMENT CLASS ACTIONS: FIVE CASE STUDIES 80 (1998).
143. 11 U.S.C. § 524(g)(2)(B)(ii)(IV)(bb) (2000); see also supra text accompanying note 123.
144. The first opportunity to opt out, of course, is the "notice" stage of class certification. FED. R. CIV. P. 23(C)(2).
145. The silicone breast implants settlement permitted claimants to opt out after seeing how claims were "ratcheted down" to account for limitations in total settlement funds available. TIDMARSH, supra note 138, at 80.
146. Requiring that all parties, including the minority, be bound by the final vote responds to the concern that pursuing claims outside of aggregate settlement undermines the purposes of the settlement. See supra text accompanying notes 88-90.
147. See, e.g., D.H. Overmyer Co. v. Frick Co., 405 U.S. 174, 185 (1972) ("The due process rights to notice and hearing prior to a civil judgment are subject to waiver." (citing Nat'l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 315-16 (1964))); see also supra note 83.
148. See supra notes 75-78 and accompanying text.
149. Part II identified three main problems with the current version of Rule 1.8(g) in the context of mass torts: the disjunction between the Rule's overreaching purpose and the reality of aggregate settlement; the Rule's lack of clarity; and the obstacles it creates for parties seeking the resolution of claims.
150. See supra Part II.A.
151. See supra text accompanying note 134.
152. See, e.g., Brickman, supra note 110, at 868 n.142 ("'[I]n the asbestos context . . . a voting majority can be made to consist of non-malignant claimants whose interests may be adverse to those of claimants with more severe injuries.'" (quoting In re Combustion Eng'g, Inc., 391 F.3d 190, 244 (3d Cir. 2004))); see also STEPHEN J. CARROLL ET AL., RAND INST. FOR CIVIL JUSTICE, ASBESTOS LITIGATION xxiv (2005), available at http://www.rand.org/pubs/monographs/2005/RAND_MG162.pdf ("The fraction of claims that asserted nonmalignant conditions began to grow in the early 1990s, rising to more than 90 percent of annual claims in the late 1990s and early 2000s.").
153. See McGovern, supra note 109, at 1825 (suggesting that one could "eliminate the need for a vote altogether" if courts had expanded authority over "issues that might have been resolved by negotiation").
154. See supra note 20 and accompanying text.
155. See supra notes 23-39 and accompanying text (describing Amchem and Ortiz settlements in which defendants preferred global class settlements).